Wright Machinery Corporation manufactures automible engines for major automobile producers. these engiines have a warranty against any defects for a period of five years. Even though wright Machiney does not have a seperate warranty contract, it assumes that the $993 selling price of each egine includes an implied service contract of $73 per engine. During 2007 Wright Machinery sold 8000 engines to National Motors. During 2007 Wright Machinery repaired defective motors at a cost of $94,400.
Required
Prepare the journal entries for the preceeding transactions, assuming that wright Machinery uses the sales warranty accrual method to account for warranties.